BCG COVID 19 BCG Perspectives Version10

COVID-19 BCG Perspectives Series
Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 16 June 2020 Version 10.1.
Facts, scenarios, and actions for leaders
Value protection and

acceleration roadmap to
win in the new reality
16 June 2020
COVID-19
BCG Perspectives
Objectives of this document
COVID-19 is a global Leaders need to drive an integrated
societal crisis response to navigate the crisis
We at BCG believe that the COVID-19 outbreak is It is the duty of health, political, societal, and business
first and foremost a societal crisis, threatening leaders to navigate through this crisis. A complex
lives and the wellbeing of our global community. interplay of epidemic progression, medical response,
Society now, more than ever, needs to collaborate government action, sector impact, and company
to protect people's lives and health, manage mid- action is playing out. This document intends to help
term implications, and search for lasting solutions. leaders find answers and shape opinions to navigate
the crisis in their own environments. It encourages
thinking across the multiple time horizons over which
we see the crisis manifesting itself.
Source: BCG 1
COVID-19 will be a journey with three distinct phases, requiring
an integrated perspective
Flatten Fight Future
Typically the initial phase after a pandemic Finding paths to collectively fight the virus, Disease controlled through vaccine/cure/
outbreak–goal is to urgently limit number restart the economy, and support society in herd immunity, and treatment within
of new cases, especially critical care balancing lives and livelihood sustainable medical capacities possible
Social distancing (lockdown) and partial business Increasing economic activity with recovering Reactivated economy with strong business
closures lead to economic recession with large GDP, some business reopenings, and social rebound and job growth, social restrictions
employment impact distancing on a sustainable level limited or completely suspended
1. Disease progression, health care system capacity, and response
2. Government policies and economic stimulus
3. Economic scenarios
4. Business engagement and response
5. Public engagement and response
All of the above five factors result in specific economic and social outcomes in each phase
Source: BCG 2
Executive Summary | COVID-19 BCG Perspectives
As we navigate the 'Fight' phase, Leadership Teams should develop a winning value protection and acceleration roadmap with integrated
business, financial, and investor strategies that strengthen the share price, and drive strong and sustainable Total Shareholder Return (TSR)
• Equity markets have been highly volatile through the crisis and a wide variation in TSR1 performance is visible across and within sectors
• In this uncertain environment, investors are giving leadership teams flexibility and expect companies to 'use the crisis' to build long-term advantage
• It is more important than ever to build a value protection and acceleration roadmap to become both 'a great company' and 'a great stock'
• To do this right, leadership teams will need to focus intensely on six imperatives: 'de-average' shareholder value, understand your investor, challenge
your plan, sharpen capital allocation, explore bold portfolio moves, and create an ownership culture
• Driving shareholder value requires addressing the needs of all key stakeholders: customers, employees, suppliers, communities, and shareholders
Across countries, efforts to flatten the curve continue; severe global economic downturn expected for 2020
• Globally, 3.6 million patients have recovered from COVID-19; growth rate of daily new cases at ~1%2
• Increase in daily new cases is propelled by South America, Asia, and Africa, while Europe and North America continue to improve
• Vaccine and therapeutics development continues to move at unprecedented pace; nine vaccine candidates currently in phases I, II, and III
• Recent economic forecasts point toward severe downturn in 2020; rebound of global GDP is not expected before 2021
• Despite rebound in the recent past, no sector at pre-crisis TSR1 levels
We believe during Taking an integrated perspective on Thinking multi-

health/medical progression, timescale in a Flatten-
this crisis leaders governmental responses, societal Fight-Future logic
need to think along reactions, and economic implications
two dimensions: to understand business/sector impacts
1. Total Shareholder Return; 2. Daily new case growth rate is calculated based on 7 day rolling average
Source: BCG 3
Guide for leaders
Shareholder value 'call to action'
Building a value protection and acceleration roadmap
Updated analyses and impact

Epidemic progression and virus monitoring
Economic and business impact
COVID-19 Impact dashboard
As of 12 June 2020
Epidemic Progression Economic Impact Business Impact
World Bank (8 June) Banks8
GDP forecasts (%) Stock market performance11
7.6M 3.6M 425K
# of cases # of recoveries # of fatalities 20 Mar
2020 -10 -8 -6 -4 -2 0 2 4 6 8 10 -31% -28% -30% -34% -10%
vs 21 Feb
-9.1% Baseline 1.0%9
5 June 12 June Europe 12 June -9% 0% -18% -12% -4%
-6.1% 1.8% vs 21 Feb
Growth rate1 of daily S&P500 NASDAQ FTSE100 DAX CHN SSE
2.2% 0.9% US
new cases -6.1% 0.7%
# of days of case
36 39
Japan Total Shareholder Returns (S&P1200)11
doubling2 1.0% 5.9%
China First column: 21 Feb to 20 Mar; Second column: 21 Feb to 12 June
# of reported recoveries -3.2% 5.8%
as % of total cases
45% 47% Americas Europe Asia
India Pharma -19% -1% -20% -6% -22% 7%
# of tests / case3 18 19
Estimated employment impact F&B12 -26% -10% -24% -13% -12% -3%
# of tests / million3 48K 54K Total employment Employees % of employees
Telecom -17% -8% -20% -18% -14% -10%
2019 (M) impacted10 (M) impacted Software -30% -6% -32% -13% -28% -4%
Vaccine Treatment US 159 44 28% Retail -42% -11% -36% -16% -24% 12%
Trials in pre-clinical UK 33 10 29% Capital goods -38% -16% -35% -18% -29% -5%
stage and beyond4 160 128
Germany 45 12 26% Auto -47% -18% -45% -19% -32% -10%
Trials in Phase 1 and
beyond5
9 55 France 28 13 48% Real Estate -42% -26% -26% -26% -22% -10%
Current est. timeline 9-33 6-21 Italy 23 8 35% Energy -56% -29% -45% -27% -41% -23%
for approval & scale-up months6 months7
Spain 20 4 22% Banks -41% -26% -44% -35% -26% -13%
1. Growth rate calculated basis rolling 7 day rolling average of new cases; 2. No. of doubling days based on 7 day average growth rate of total cases; 3. Median of values for top 15 countries by nominal GDP (except China); 4. Ongoing trials including pre-clinical, Phase 1 (first trial in humans), Phase 2, Phase 3, Phase 4 ; 5.
Ongoing trials including Phase 1 (first trial in humans), Phase 2, Phase 3, Phase 4; 6. 9 month development current "best case" for first supply (12 months since Apr 2020), then likely to require time for scale-up and continuing to prepare for populations; 7. Remdesivir is approved now, could be more widely available by
Jul-Sep 2020. For the next wave, estimated timeline is Oct '20 – April '22 (6-21 months). If first round of drugs being tested succeeds – then 6-9 months; if not – substantially longer; 8. For India, forecast is for financial year; for others, it is for calendar year; YoY forecasts; Range from forecasts (where available) of World Bank,
International Monetary Fund, JP Morgan Chase; Goldman Sachs, Morgan Stanley; Bank of America; Fitch Solutions; Credit Suisse; Danske Bank; ING Group; HSBC; As of reports dated 12 April 2020 to 5 June 2020; 9. World Bank January 2020 forecast; 10. Available cumulative data as of 05 June 2020 from mid of March
2020; Includes increase in unemployment & employees covered by gov. wage support programs; US: unemployment insurance claims (data as of 11 June); UK (data as of March) and Italy (data as of April) active & inactive unemployment; Germany: short-time work requests, may not actually utilized (data as of May); France: 5
(data as of June); Spain: (data as of May); figures are changing rapidly and often being reported with a lag from the current date; 11. Sectors are based on Global Industry Classification Standard (GICS) definitions; Performance is tracked for two periods, first from 21 February 2020 (before international acceleration of
outbreak) to 20 March 2020 (trough of the market) and from 21 February 2020 through 12 June 2020; 12. Food & Beverage. Source: WHO, World Bank, JHU CSSE, Our World in Data, IMF, Bloomberg, BCG, Eurostat (Europe), Gov't Wage Support & Unemployment figures & comments: UK Govt 5/12 (UK), ISTAT 4/30 &
FitchRatings 5/18 (Italy), U.S. Department of Labor 5/21 (US), Ministerio de Trabajo 6/2 (Spain), Ministere du Travail 6/5 (France), Arbeitsagentur 6/3 (Germany)
Global equity markets have been highly volatile through the crisis
and in the resulting rebound from March lows
As of 12 June 2020
Markets largely looked past Inflection with virus's spread to Europe, US, beyond;
virus’s spread in China and subsequent rebound of stock markets Faster rebound
Cumulative 21 Feb
returns (%) Most stock markets have rebounded
10%
rapidly within four months1
compared with 13+ months2 during
5% the Global Financial Crisis; NASDAQ
0% hit all-time high3 on 5 June
-5%
-10%
-15%
-20% Continued high volatility
-25%
In spite of rapid rebound,
-30% volatility continues to be higher
-35% (25-414) compared with pre-
1 Jan 1 Feb 1 Mar 1 Apr 1 May 1 Jun COVID levels (14-195)
S&P500 NASDAQ DAX FTSE China SSE
1. Starting 21st February 2020; 2. Time taken by S&P500 to come within +/-5% of price on 26/09/2008; 3. NASDAQ subsequently closed on all-time highs on 8 June 2020, 9 June 2020 and 10 June 2020; 4. 15-day VIX 6
range from 22 May 2020 to 12 June 2020; 5. 15-day VIX range from 30 Jan 2020 to 20 Feb 2020. Source: BCG
A wide range of TSR performance visible across and within sectors
As of 12 June 2020 Based on top S&P
Global 1200 companies
Total Shareholder Return (TSR) = Change in share price + dividend yield
Total Shareholder Return from 21 Feb 2020 to 12 June 2020 in % per sector1
40
20
-20
-40
Retailing
Pharma
Energy
Media
Food/staples Retail
Food & Beverage
Transport
Durable Goods
Household Products
Health Equipment
Materials
Prof. Services
Tech Hardware
Telecom
Hospitality
Software
Financials
Real Estate
Auto
Banks
Semiconductors
Insurance
Utilities
Capital Goods
Healthier2 sectors Pressured2 sectors Vulnerable2 sectors
Top 10% Bottom 10% Median Performance spread between bottom & top 10%
1. Sectors are based on Global Industry Classification Standard (GICS) definitions ; data as of 12 June 2020 2. Categories are defined based on comparison with S&P Global 1200 median YTD
TSR and median net debt/enterprise value (EV) based on latest balance sheet: healthy = TSR & debt/EV > median, pressured = TSR or debt/EV < median, vulnerable = TSR & debt/EV < median; 7
Source: S&P Capital IQ; BCG ValueScience® Center
In this uncertain environment, investors want leadership teams to 'use the crisis'
to build sources of long-term advantage for their companies
As of 07 June 2020
91% 66% 51%
of investors believe it is important of investors believe companies of investors believe it is
for companies to prioritize should actively pursue important for companies to
building business capabilities acquisitions2 and consider continue to fully pursue their
for advantage and growth, even at divesting2 businesses to ESG3 agenda and priorities,
the expense of EPS1 strengthen the overall company even at the expense of EPS1
What we have heard from investors:
I have written 2020 off. I want Don't waste the crisis. If you have We remain heavily committed to
companies to invest now to the liquidity, make bold ESG3 with an emphasis on social
strengthen advantage and build acquisitions. And exit businesses responsibility, especially in today's
platforms for growth that are not long-term winners environment
1. Earnings per share; 2. 68% of investors believe companies should actively pursue acquisitions; 64% believe they should consider divestitures; 3. Environmental, Social and Governance;
Note: All questions were posed with respect to financially healthy companies (i.e., companies with relatively strong & resilient free cash flow and strong balance sheets).
Source: BCG's COVID-19 Investor Pulse Check, June 7, 2020; n = 150; BCG COVID-19 investor interviews with select institutional investors (May-June 2020).
8
It is more important than ever for leadership teams to build a value protection
and acceleration roadmap to become 'a great company' and 'a great stock'
Business strategy
• Growth, margins,
portfolio, targets, risk
Great Company Great Stock
• Financially resilient • Stabilized share
• Competitively price during crisis
Strong and advantaged • Optimal valuation
sustainable • Growing profitably multiple
Investor TSR Financial • Premium ROIC1 • Strong and sustainable

TSR in medium- to
strategy strategy • Committed to ESG2 long-term
• Valuation • Employer of choice • Stable and loyal long-
• Capital structure
multiple term investor base
• Dividends/
• Messaging buybacks
• Investor type
1. Return on invested capital; 2. Environmental, Social and Governance

Source: BCG
9
Key value protection and acceleration questions on the minds of business leaders
1 2 3
'De-average' shareholder value Understand your investor Challenge your plan
How have and will my businesses Have my investment thesis and Will my crisis-adjusted plan deliver on
contribute to share price and TSR? 'natural' investor type changed my strategic and TSR ambitions?
due to the crisis?
What actions should we take to What are alternative strategic paths that
strengthen the plan and increase What moves will attract the right can deliver stronger and more
our confidence? investor type? sustainable TSR, considering risks and
trade-offs?
4 5 6
Sharpen capital allocation Explore bold portfolio moves Create an ownership culture
How should we distort financial and Are there acquisitions we should pursue How should we embed TSI3 to ensure
human capital to deliver stronger TSR? today to strengthen our business? long-term shareholder value creation?
What combination of organic (including Are there businesses we should consider How can we align target setting,
ESG1), inorganic, and financial strategy2 divesting to strengthen the company? planning and incentives to create an
levers can enhance shareholder value? ownership culture?
1. Environmental, Social and Governance; 2. E.g. Dividends & buybacks; 3. Total societal impact 10
Source: BCG
1 Example: Global luxury player used portfolio 'x-ray' to gain deep understanding of
shareholder value across markets and divisions
Today's Historical 3-year Planned 3-year
share price value creation value creation
'De-average' $ / share $ / share TSR (%) $ / share TSR (%)
shareholder value Region 1 34.2 9.9 11% 20.7 17%
Markets Region 2 14.9 5.4 13% 6.1 12%
Region 3 8.1 (0.1) (0%) 9.6 30%
Understand what is … … … … … …
driving your valuation Division A 24.2 7.0 17% 15.3 18%
and how your Divisions Division B 17.6 3.8 11% 2.4 4%
businesses contribute Division C 14.2 (1.6) (5%) 8.5 17%
to share price and TSR … … … … … …
Overall 81 19 9% 59 20%
Drives greater value than expected Drives less value than expected
Understand how your different businesses can drive shareholder value
Challenge line of Ensure plans are Determine portfolio Allocate financial

business plans where grounded in reality and roles (e.g., growth and human
historical and planned adjust accordingly engine, growth funder, resources to each line
TSR are significantly harvest, exit, of business based on
different turnaround) its portfolio role
11
Source: BCG
2 Example: B2B technology services company used investor segmentation to develop TSR
strategy roadmap during GFC1 and migrate to a more attractive investor type
Original investor type Optimal new target type

Understand
Investors' criteria “Deep Value” investors “Quality / Alpha Value” investors
your investor
Revenue growth
0% - GDP level growth 3-5% organic + some tuck-in M&A
expectations
Engage with your
Time horizon In & out with P/E2 5+ years
investors to
understand their
sentiment and how Expected P/E multiple Relatively weak P/E, typically <15x 14x–18x
your 'natural' investor
type has evolved Target payout / yield 5-8% FCF3 yield paid out 3–5% dominated by dividends
as dividends or buybacks
Actively engage with your investors, now more than ever
Treat your Determine your Shape your business Adjust your Communicate
investors like your 'natural' investor strategy to meet this financial policies a compelling
customers type and whether investor type's growth, to enhance appeal investment
(segment, market) you are currently margin, and ROIC3 to this investor thesis and
aligned with it expectations roadmap
1. Global Financial Crisis 2008-09; 2. Price to earnings multiple; 3. Free cash flow 12
Source: BCG
3&4 Example: U.S. services company used TSR lens to assess alternative strategic paths and
optimize capital allocation
Alternative strategic paths
Challenge your Major Organic growth + Organic growth +

Initial transformative cost reduction + cost reduction +
plan & sharpen management plan
acquisition tuck-in M&A financial strategy
capital allocation 15.6
13.9
10.4
Pressure-test share price Estimated 7.4
and TSR potential of your 3-yr TSR (%)
crisis-adjusted plan and
evaluate alternative Indexed share price 100 89 108 114
strategic paths TSR sustainability Medium Low High Low-medium
Risk Moderate Very high Moderate-high Low-moderate
Ensure your uses of
capital enable you to
emerge stronger from the
crisis Use shareholder value lens to chart optimal corporate strategy path
Align as a Determine share price Develop financial depiction Choose optimal

leadership team on and TSR potential of your of alternative strategic strategic path and
your strategic and plan and pressure-test paths and evaluate TSR allocate capital
TSR ambitions underlying assumptions characteristics accordingly
13
Source: BCG
5 Weak-economy deals (if reflected in lower company valuations) outperform
strong-economy deals by an average of ~10 TSR points
Weak-economy
deals
Explore bold
106.4
portfolio moves Cumulative relative
106.1
TSR index
100.4
100
Consider game- 100.2 +9.6
changing acquisitions
and divestitures given T-3 T+3
Strong- 99.4
dynamic market economy deals
conditions and 96.5
competitive landscape Year 1
Year 2
Be prepared to pursue portfolio reshaping moves in today's environment
Evaluate portfolio for Scan market for Evaluate optimal Prepare the Board for action in
potential divestiture potential targets or deal structures advance if an attractive deal
opportunities consolidators unexpectedly comes available
Note: Strong-economy (weak-economy) years are those in which the respective global real GDP growth rate is in the top (bottom) third of all growth rates in the
observation period. Total of 9,987 M&A transactions with a public buyer comprises pending, partly completed, completed, unconditional and withdrawn majority 14
deals announced between 1980 and 2018 with a deal value greater than $250 million. Share price three days before the announcement date (T-3) equals 100. Share
performance from T-3 to three days after the announcement (T+3) equals the announcement effect.; Source: Revinitiv, Datastream, BCG
6 Embrace shareholder value
philosophy and metrics
Create an
ownership culture
Use TSR and TSI1
Strategic & in strategic planning
TSR ambition to measure & track
Align planning, KPIs, and shareholder value
incentives with delivering creation
sustained TSR and TSI1
success and winning in
Compensate for
the new reality
shareholder value
creation
Adopt a strong shareholder value mindset and discipline
Put TSR front and Train senior Cascade Set targets, pressure- Incorporate TSR and
center, use TSR for leaders on capabilities test plans and TSI into reporting;
high-stakes decisions, shareholder value through the initiatives, allocate align & communicate
and embed TSI as a principles and how organization resources, and track incentives; reward
TSR accelerant to lead like owners performance TSR and TSI
performance
15
1. Total societal impact
Source: BCG
Deliver value to your customers
Driving shareholder
value requires Invest in your employees
leadership teams to
address the needs of Work fairly and ethically with your suppliers
all key stakeholders—
now more than ever
Support the communities in which you work
Generate long-term value for your shareholders
Source: August 2019 Business Roundtable statement 16

Guide for leaders
Shareholder value 'call to action'
Building a value protection and acceleration roadmap
Updated analyses and impact

Epidemic progression and virus monitoring
Economic and business impact
~3.6M reported recoveries so far; EPIDEMIC PROGRESSION
growth rate of daily new cases at ~1%1 & VIRUS MONITORING
As of 12 June 2020
Russia
UK 29th May'20 05th June'20 12th June'20
France Italy
USA Spain China Japan
India 101K 118K 125K
(∆0.9%) (∆2.2%) (∆0.9%)
# of daily new cases (growth rate%)1

Brazil
South
Africa 37
8 36
12 39
12
days days days
Daily cases' growth (≥100 daily cases)1 # of days of case doubling2 globally
Less than 100
<-5% -5%-0% 0-5% >5%
daily cases1
2.5M 3.0M5 3.6M
185 7.6M [∆1.8%]4 425k [∆1.1%]4

(42%) (45%)
Total # of recoveries (as % of confirmed cases)

(47%)
Countries with cases3 Confirmed cases globally Fatalities globally
Note: Continued cases and fatalities are subject to different testing, propensity, reporting standards and hence are imperfect measures
1. # of daily new cases calculated as 7-day rolling average; growth rate calculated basis 7-day average; 2. No. of doubling days calculated basis 7-day average growth rate of total cases; 3 Basis Johns Hopkins
CSSE; 4. Daily growth rate basis 7-day average; 5. Updated numbers for 5th June as reported in updated data by Johns Hopkins CSSE 18
Sources: Johns Hopkins CSSE; Our world in data; BCG
Daily new cases are increasing globally; EPIDEMIC PROGRESSION
propelled by South America, Asia, and Africa & VIRUS MONITORING
As of 12 June 2020
Several European and North American countries ... but countries in South America, Asia, and Africa
continue to improve doubling rate… witness an increase in daily new cases
Flatten
Daily growth rate of total cases (seven-day average) Daily cases (seven-day rolling average)
6% 140,000
Rates improving from top to bottom
Cases doubling:
Argentina S Africa
14 days
5% 120,000
Kenya
Egypt Chile 100,000
4% Cases doubling: Nigeria India Brazil South
21 days Mexico America
80,000
Colombia
3%
Asia
60,000
Ghana
2% Sweden North Africa
Russia
40,000 America
Iran
Singapore US
1% Algeria Canada Germany
France
UK 20,000
S Korea Austria Europe
Italy
Australia Japan China Spain
0% 0
Fight 1,000 10,000 100,000 1,000,000 Mar Apr May 12 June
Cumulative number of confirmed cases (log scale)
South America Asia1 Africa North America Europe South America Asia1 Africa North America Europe
1. Includes Middle East & Oceania

Source: Johns Hopkins CSSE; Our World in data; BCG 19
EPIDEMIC PROGRESSION
Epidemic progression snapshot & VIRUS MONITORING
As of 12 June 2020 Data shown only for G20 countries with 100+ daily new cases
Daily cases Cumulative cases Testing

Growth of daily new cases1 Daily Cases/M Total cases Recovery Test/ case
New cases per In thousands % of total cases current value3 \
2 weeks ago
million population2 0 10 20 30
Argentina 8.5% 26 27 30% 8 \
KSA 8.4% 94 116 68% 9 \
Indonesia 6.1% 3 35 36% \

9
S Africa 4.1% 43 59 57% 18 \
Mexico 2.2% 31 134 72% 3 \
India 2.2% 7 298 49% 18 \
Brazil 0.9% 126 803 54% 2 \
Turkey 0.4% 11 174 85% \

14
USA 0.0% 65 2,023 27% \

11
Russia -0.2% 60 502 53% \

28
Italy -1.0% 5 236 73% \

19
France -1.1% 7 156 38% \

9
Germany -2.2% 4 186 92% \

25
UK4 -3.5% 21 291 \

13
Canada -4.4% 14 98 59% \

21
1. Growth rate calculated basis 7-day rolling average of new cases; 2. 7-day rolling average; represented scale rounds up daily case/m to next 10th place; 3. Test/case data is not updated daily for few countries, 20
data represented is within last 1 week; 4 UK recovery data not available; Source: Our World in Data, John Hopkins, Worldometers, BCG
Vaccine fast movers | 9 vaccine candidates already into clinical trials EPIDEMIC PROGRESSION
& VIRUS MONITORING
As of 12 June 2020
1 4 Phase I/II
151
Phase II/III
Oxford Univ. & AstraZeneca BioNTech & Pfizer China National Biotec1 Pre-clinical
Phase III recruitment underway; Phase I/II started April 2020; data Phase II trial in June 2020;
planned supply build-up of 400M+ exp. in July 2020; if approved, expected completion of
doses by end of year (if approved) distribution possible by Dec 2020 final trials by Nov 2021
Novavax Sinovac 160 Total

2 Phase II Phase I/II started in May 2020;
data expected in July 2020 and
Phase II trial in June 2020;
expected completion by
CanSino Biologics final completion by Nov 2021 Aug 2020
Phase II advancement since "By the beginning of 2021, we hope

to have a couple of hundred million
2
Apr 2020; follow-up expected
by Oct 2020 doses. I'm cautiously optimistic with
Phase I
the multiple candidates we have
Moderna Chinese AMS2 Inovio with different platforms."
FDA fast track designation in May Trial started in Mar 2020; Phase I initial data expected Dr. Anthony Fauci, Member, White House
2020; Phase III on 30,000 patients follow-up expected by Dec 2020 June 2020; Phase II/III trials Coronavirus Task Force
planned in July 2020 and completion by Apr 2021 start July/August 2020
1. Listed as two candidates by WHO: Beijing institute of Biological Products / Sinopharm & Wuhan Institute of Biological
Products / Sinopharm; 2. Chinese Academy of Medical Sciences and Institute of Medical Biology. Source: WHO (June 9th), Update in last 2 weeks 21
Citeline Pharma Project (June 5th), Milken Institute (June 2nd), ClinicalTrials.gov (May 19th), Telegraph, Bloomberg, BCG
Economic forecasts point toward severe downturn in 2020; ECONOMIC &
rebound of global GDP not expected before 2021 BUSINESS IMPACT
As of 12 June 2020
GDP growth forecast vs. baseline GDP level forecast1

EOY 2021 vs. EOY 2019
2020 2021
-10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10%
Forecast -6.1% Baseline 1.8% 1.7% 4.0%
US 97-100%
Forecast range
-9.1% 1.0% 1.3% 4.5%

Europe 96-99%
1.0% 5.9% 5.8% 6.9%

China 107-112%
-6.1% 0.7% 0.6% 2.5%

Japan 96-99%
-3.2% 5.8% 3.1% 6.1%

India2 101-108%
Last week's forecast range (only
Forecast World Bank (Jun 2020) Baseline World Bank (Jan 2020) Forecast range Banks3 + IMF
shown if change is significant)
Note: As of reports dated 31 March 2020 to 12 June 2020, YoY forecasts 1. Range calculated with 25th & 75th percentile values of forecast range 2. For India, forecast is for financial year; for other countries, the
forecast is for calendar year; 3. Range from forecasts (where available) of World Bank, International Monetary Fund (April 2020), Goldman Sachs, JP Morgan Chase; Morgan Stanley; Bank of America; Fitch
Solutions; Credit Suisse; Danske Bank; ING Group; HSBC; Source: Bloomberg; World Bank; IMF; BCG 22
Despite rebound in the recent past, no sector at pre-crisis TSR levels ECONOMIC &
BUSINESS IMPACT
As of 12 June 2020 Based on top S&P

Global 1200 companies
Categories based on TSR & net debt/enterprise value2
TSR performance3 Companies with probability of default >15%4
21 Feb 2020 21 Feb 2020 29 May 2020 29 May 2020
21 Feb 2020 12 June 2020
- 20 Mar 2020 - 12 June 2020 - 12 June 2020 - 12 June 2020
Pharma -20% -2% 0% 11%
Semiconductors -30% -3% 0% 0%
Healthier sectors Household Products -16% -4% 0% 0%
Tech Hardware -26% -5% 0% 0%
Food/staples Retail -10% -7% 0% 0%
Software -30% -8% 9% 8%
Health Equipment -31% -9% 0% 0%
Retailing -40% -10% 0% 41%
Telecom -17% -10% 0% 8%
Materials -32% -10% 4% 11%
Pressured sectors Food & Beverage -23% -10% 0% 0%
Prof. Services -30% -12% 0% 0%
Transport -34% -13% 0% 36%
Financials -35% -14% 0% 0%
Media -36% -14% 0% 8%
Utilities -30% -15% 0% 0%
Auto -41% -15% 0% 29%
Capital Goods -35% -15% 2% 7%
Durable Goods -39% -18% 0% 0%
Vulnerable sectors Insurance -39% -22% 0% 0%

Real Estate -39% -24% 0% 17%
Banks -39% -26% 0% 4%
Hospitality -44% -27% 7% 36%
Energy -52% -29% 0% 21%
Pos. trend >= 2%

Note: Based on top S&P Global 1200 companies; Sectors are based on GICS definitions; 1. TSR performance on 12 June 2020 compared to 29 May 2020; 2. Net debt & enterprise
value from latest available balance sheet; Categories defined based on comparison with S&P Global 1200 median: healthy = TSR & debt/EV > median, pressured = TSR or debt/EV No sig. change
< median, vulnerable = TSR & debt/EV < median; 3. Performance is tracked for two periods, first from 21 February 2020 (before international acceleration of outbreak) to 20 March Neg. trend >= 2% 23
2020 (trough of the market) and from 21 February 2020 through 12 June 2020 based on median; 4. Implied by 5-year Credit Default Swap based on median Source: S&P Capital IQ;
BCG ValueScience® Center; BCG
US investors' current perspectives on economic and ECONOMIC &
stock market impact of COVID-19 crisis BUSINESS IMPACT
As of 07 June 2020
US example: Investor Pulse Check on US economy and stock market
Economic impact and recovery Impact on stock markets
End of Investor's expected timeline Investors that are bearish or neutral, respectively,
Q4 for the severe impact of crisis 52% | 25% for the remainder of 2020
2020 to extend until
Investors that are bullish for 2021 and 2022,

41% | 55% respectively
Investors anticipate a rapid
Only V-shaped recovery to the pre-
18% crisis economic level and
Investors that are more bullish on the economy &
growth rate 64% | 53% the stock market, respectively vs. one month ago
Investors' expectation2 for S&P500 S&P500 Expected future high, to

the amount of total fiscal down by Expected future low, to up by
~3.9T stimulus needed to support be reached by Q3 2020
be reached by Q2 2023
the economy 16%1 16%1 (exp. annual TSR of 8%)
1. Compared to 7 June 2020 prices; 2. Average expectations of investors; 24

Source: BCG's COVID-19 Investor Pulse Check, June 7, 2020; n = 150.
European investors' current perspectives on European Growth Tech ECONOMIC &
BUSINESS IMPACT
As of 27 May 2020
Europe example: Investor Pulse Check for European 'Growth Tech' (large, tech-oriented startups)
Investment volume Investment criteria Growth Tech industries
Growth Tech investors are bearish on Growth Tech investors expect shift in Potential to outperform larger rivals; but
2020… investment criteria to resilience factors… different recovery shapes across industries
of investors attach greater expect Software/services to

will delay deals originally
87% planned for 2020
55% importance to time to V 61% rebound quickly
profitability
expect Travel to recover,

will invest less in 2020 than
of investors re-prioritize the U 100% but slowly
66% in record year 2019
50% importance of management
team's quality
V expect Digital Health to
or
…but very bullish on 2022 …as significant uncertainty prevails U 85% return to pre-COVID
trajectory1.2
expect to invest as much or For Growth Tech investors, V
98% more in 2022 than in record 3/5 market uncertainty affects U or
67%
expect EduTech to return
to pre-COVID trajectory1,3
year 2019 investment behavior
1. Potential contingency: If structural barriers could be alleviated, accelerated growth could be sustained 2. 55% inverted V, 30% inverted U 3. 50% inverted V, 17% inverted U 25
Source: BCG Growth Tech Investor Pulse Check (n = 70), run in 28 April 2020 to 27 May 2020
Investors want discretionary dollars focused on 'financial health' to ECONOMIC &
BUSINESS IMPACT
survive the crisis; 'growth & competitive position' to win the new reality
As of 07 June 2020
US example: Priority areas, management should focus on their investments1

(% of investors who listed the below areas as a top 3 priority)
Flatten Fight & Future
Financial health 43% Growth & competitive position 44%
Health and safety 19% Tech 22%
Business continuity / 10% Efficiency 22%
flexibility /
risk management Portfolio reshaping 20%
Employees 14%
Return of cash to shareholders 12%
R&D / new product development 10%
ESG2 8%
Transparency / communication 7%
Re-opening 6%
Notes: 1.Original question "For financially healthy companies (that you invest in or follow), what are the top 3 priority areas (please list in order of importance) that you would like to see management teams
focus their discretionary investment dollars on during the next 6-12 months?"; Raw responses to the survey were classified into categories. "Other" not included (n=1); 2. Environment Social Governance; 26
Source: BCG's COVID-19 Investor Pulse Check, June 7, 2020; n = 150 overall survey, n=138 for this optional question, though number of priority areas outlined by respondents slightly differed.
Additional perspectives on COVID-19
COVID-19 BCG Perspectives Selected publications
Edition #9 Edition #8 Edition #7 Corporate finance Corporate finance Corporate finance
Future of Global Trade Galvanizing nations for Sensing Consumer Managing Corporate The COVID-19 Investor The COVID-19 CFO
and Supply Chains the new reality Behavior & seizing Venturing Through the Pulse Check Series Pulse Check
Demand Shifts Pandemic
Edition #6 Edition #5 Edition #4 M&A and Divestitures M&A and Divestitures M&A and Divestitures
Restructuring Costs, and Revamping Accelerating Digital & The Asia-Pacific M&A Navigating Merger COVID-19’s Impact on
managing Cash and Organizations for the Technology Report: Dealmaking in Clearance During Global M&A
Liquidity New Reality Transformation Turbulent Times the Crisis
Edition #3 Edition #2 Edition #1 Transformation Banking Energy

Emerging stronger from Preparing for the restart Facts, scenarios, and How CEOs Can Win the What’s Next for US How Uncertainty Is Hitting
the Crisis actions for leaders Fight and Transform to Banking Consolidation in M&A in Oil and Gas
Win the Future the Post-COVID-19 World?
Source: BCG 27
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COVID-19 BCG Perspectives Series

Value protection and

Flatten Fight Future

1. Disease progression, health care system capacity, and response

2. Government policies and economic stimulus

4. Business engagement and response

5. Public engagement and response

We believe during Taking an integrated perspective on Thinking multi-

Updated analyses and impact

Total Shareholder Return (TSR) = Change in share price + dividend yield

Food & Beverage

91% 66% 51%

What we have heard from investors:

Investor TSR Financial • Premium ROIC1 • Strong and sustainable

1. Return on invested capital; 2. Environmental, Social and Governance

Understand how your different businesses can drive shareholder value

Challenge line of Ensure plans are Determine portfolio Allocate financial

Original investor type Optimal new target type

Actively engage with your investors, now more than ever

Challenge your Major Organic growth + Organic growth +

Align as a Determine share price Develop financial depiction Choose optimal

Be prepared to pursue portfolio reshaping moves in today's environment

Adopt a strong shareholder value mindset and discipline

Generate long-term value for your shareholders

Source: August 2019 Business Roundtable statement 16

Updated analyses and impact

growth rate of daily new cases at ~1%1 & VIRUS MONITORING

India 101K 118K 125K

# of daily new cases (growth rate%)1

185 7.6M [∆1.8%]4 425k [∆1.1%]4

Total # of recoveries (as % of confirmed cases)

Countries with cases3 Confirmed cases globally Fatalities globally

propelled by South America, Asia, and Africa & VIRUS MONITORING

1. Includes Middle East & Oceania

Daily cases Cumulative cases Testing

Indonesia 6.1% 3 35 36% \

S Africa 4.1% 43 59 57% 18 \

Mexico 2.2% 31 134 72% 3 \

India 2.2% 7 298 49% 18 \

Brazil 0.9% 126 803 54% 2 \

Turkey 0.4% 11 174 85% \

USA 0.0% 65 2,023 27% \

Russia -0.2% 60 502 53% \

Italy -1.0% 5 236 73% \

France -1.1% 7 156 38% \

Germany -2.2% 4 186 92% \

UK4 -3.5% 21 291 \

Canada -4.4% 14 98 59% \

Novavax Sinovac 160 Total

Phase II advancement since "By the beginning of 2021, we hope

GDP growth forecast vs. baseline GDP level forecast1

-9.1% 1.0% 1.3% 4.5%

1.0% 5.9% 5.8% 6.9%

-6.1% 0.7% 0.6% 2.5%

-3.2% 5.8% 3.1% 6.1%

As of 12 June 2020 Based on top S&P

Vulnerable sectors Insurance -39% -22% 0% 0%

Pos. trend >= 2%

US example: Investor Pulse Check on US economy and stock market

Economic impact and recovery Impact on stock markets

Investors that are bullish for 2021 and 2022,

Investors' expectation2 for S&P500 S&P500 Expected future high, to

1. Compared to 7 June 2020 prices; 2. Average expectations of investors; 24